Sunday, June 21, 2015

2015 Working Capital Survey

CFO just published the 2015 working capital survey by REL Consulting. The 967 large U.S. companies included in the survey had $1.0541 trillion in excess working capital. However, low interest rates appear to have led to a level of apathy in working capital management as very little improvement has been seen in the past year. Overall, the companies in the survey have increased total debt by 62 percent since 2007, and the cash balance at these same companies reached $932 billion, a 74 percent increase since 2007. Even with cheap debt, days' sales outstanding increased by one day, from 37.4 days to 36.4 days, although much of this was a one-time improvement in the gas and oil industry.

The best performer in the cash conversion cycle was Anadarko Petroleum with a negative 346 days due to a paypables period of 397 days! Some of the other top performers in the cash conversion cycle were Deere (negative 29 days), Southwest Air (negative 17 days), Intuit (negative 81 days), and SunEdison (negative 52 days). On the other end of the performance scale, some of the longest cash conversion cycles were at Toll Brothers (770 days), Boeing (202 days). FLIR systems (207 days), and Tiffany (494 days).